German export rules threaten European defence cooperation

By Tereza Pultarova

Published Friday, September 12, 2014

Germany’s stringent rules on export of defence technology put cross-European cooperation in the sector at risk, Airbus CEO said on Thursday.

In an interview with Reuters, the defence giant’s boss Tom Enders, a former German defence ministry planner, said Airbus’s European partners may be discouraged from further cooperation with the company, which is subject to Germany’s defence technology export rules.

The strict stance of Germany’s government has effectively blocked a contract between European multinational missile maker MBDA and Quatar. MBDA was supposed to supply the Arabian country with the Milan ER anti-tank missile. However, Germany didn’t allow parts of the system manufactured in Germany to be transfer to France for assembly.

Multinational Airbus owns 37.5 per cent of MBDA, with other shareholders being Italian Finmeccanica and the UK's BAE Systems.

"While there are lofty speeches being made that talk about more cooperation and consolidation in European defence, the axe is being swung at decades of Franco-German cooperation," Enders said.

"Which European government will want to work on important defence projects with Germany in the future? How can such a one-sided and populistic view help to drive forward a common European defence and security policy?"

Enders was in charge of a major restructuring in Airbus that helped reduce French and German state influence. Earlier this year, he warned that Germany's too tight arms export rules could lead to Airbus transfer its defence manufacturing operations to other countries.

The German economy ministry said in response that it would continue to follow a restrictive arms export policy.

"Respecting human rights is of high importance when it comes to export decisions, irrespective of which country is the receiver. This also holds true for the export of German parts," it said in a statement.

Germany's arms industry directly employs some 80,000 people and exports rose 24 per cent to €5.85bn in 2013 from 2012. The surge in exports prompted Germany’s economy minister Sigmar Gabriel to curb sales to states such as Qatar and Saudi Arabia, whose purchases had previously helped make Germany the world's third largest arms exporter.

German firms have complained that Gabriel's more restrictive arms policy has already held up thousands of export permit applications and Rheinmetall has warned on profits after Germany blocked an agreed deal to sell combat simulation equipment to Russia, going beyond EU sanctions which blocked future defence contracts.